Job Order Costing

CHAPTER

1
9
 Cost Accounting Systems Overview
(slide 1 of 3)

Cost accounting systems （成本会计制度） measure,

record, and report product costs.
Managers use product costs for setting product
prices, controlling operations, and developing
financial statements.

The two main types of cost accounting systems for

manufacturing are:
Job order cost systems （分批成本计算法）
Process cost systems （分步成本计算法）

同款 同质
 Cost Accounting Systems Overview
(slide 2 of 3)

A job order cost system provides product costs

for each quantity of product that is
manufactured.
Each quantity of product that is manufactured is
called a job.
Job order costs systems are often used by
companies that manufacture custom products for
customers or batches of similar products.

Examples of a job shop would be a(n):

Guitar manufacturer
 Cost Accounting Systems Overview
(slide 3 of 3)

A process cost system provides product costs for

each manufacturing department or process.
Process cost systems are often used by companies
that manufacture units of a product that are
indistinguishable from each other and are
manufactured using a continuous production
process.
Examples would be: Oil refineries, Paper producers,
炼油厂、造纸厂
Summary of Legend Guitars’
Manufacturing Operations
再建工程

加工成本
 Job Order Cost Systems for Manufacturing Businesses
(slide 1 of 2)

A job order cost system records and summarizes

manufacturing costs by jobs.
While jobs are still in the production process, they are
part of Work in Process Inventory.
As jobs are completed, they become part of Finished
Goods Inventory.
When the finished goods are sold to customers, their
costs become part of Cost of Goods Sold.
Flow of Manufacturing Costs

存货 - 材料 - 在产品 - 产成品 - 销售成

本
卖的时候运费 给销售人员佣金：销售费用
 Job Order Cost Systems for Manufacturing Businesses
(slide 2 of 2)

In a job order cost accounting system, perpetual inventory

controlling accounts （永续盘存控制账户） and
subsidiary ledgers （明细账） are maintained for
materials, work in process, and finished goods inventories.
 Materials
(slide 1 of 6)

The materials account in the general ledger is a

controlling account. A separate account for each type
of material is maintained in a subsidiary materials
ledger （材料明细账） :
Increases (debits) are based on receiving reports,
which is supported by the supplier’s invoice.

Decreases (credits) are based on materials

requisitions for particular jobs.
 Materials
(slide 2 of 6)
A receiving report （验收单） is prepared when
materials that have been ordered are received and
inspected.
The quantity received and the condition of the
materials are entered on the receiving report.
 Materials
(slide 3 of 6)
• When the supplier’s invoice （发票） is received,
it is compared to the receiving report.
• If there are no discrepancies 差异 , a journal entry
is made to record the purchase.
 Materials
(slide 4 of 6)
The storeroom releases materials to use in a job
when a materials requisition （领料单） is
received.
The materials requisitions for each job serve as
the basis for recording materials used.
每一批领了多少 放在领料单
 Materials
(slide 5 of 6)
For direct materials, the quantities and amounts from
the materials requisitions are posted to job cost
sheets.
Job cost sheets （分批成本单） make up the work in
process subsidiary ledger.
 Materials
(slide 6 of 6)
• A summary of the materials requisitions is used as a
basis for the journal entry recording the materials
used for the month. 领料单是基础
• For direct materials, this entry increases (debits)
Work in Process and decreases (credits)
Materials.
 Factory Labor
(slide 1 of 2)

人工费用
When employees report for work, they may use
electronic badges 电子打卡 , clock cards, or in-and-
out cards to clock in.

When employees work on an individual job, they use

time tickets （时间卡） to record the
amount of time they have worked on a
specific job.
 Factory Labor
(slide 2 of 2)

A summary of the time tickets is used as the basis

for the journal entry recording direct labor for the
month.
This entry increases (debits) Work in Process and
increases (credits) Wages Payable.
 Factory Overhead
(slide 1 of 2)
Factory overhead （制造费用） includes all manufacturing
costs except direct materials and direct labor.

Factory overhead costs come from a variety of sources,

including the following:
Indirect materials comes from a summary of materials
requisitions. 领料单
Indirect labor comes from the salaries of production
supervisors and the wages of other employees such as
janitors. 门卫
Factory power comes from utility bills.
Factory depreciation
 Factory Overhead
(slide 2 of 2)
• Assume that Legend Guitars incurred $4,600 of
overhead during December, which included $500 of
indirect materials, $2,000 of indirect labor, $900 of
utilities, and $1,200 of factory depreciation. The $500
of indirect materials consisted of $200 of glue and
$300 of sandpaper. The entry to record the factory
overhead is as follows:
 Allocating Factory Overhead
(slide 1 of 2)
Factory overhead is different from direct labor and
direct materials in that it is indirectly related to
the jobs.
That is, factory overhead costs cannot be
identified with or traced to specific jobs.
For this reason, factory overhead costs are allocated
to jobs. 摊销
 Allocating Factory Overhead
(slide 2 of 2)
The process by which factory overhead or other
costs are assigned to a cost object, such as a job 每
一批生产的 , is called cost allocation （成本分配） .
The factory overhead costs are allocated to jobs
using a common measure related to each job.

This measure is called an activity base （作业基础） ,

allocation base, or activity driver.

Three common activity bases used to allocate

factory overhead are:
1. Direct labor hours
2.Direct labor cost
3. Machine hours
 Predetermined Factory Overhead Rate
(slide 1 of 3)

Factory overhead costs are normally allocated or

applied to jobs using a predetermined factory
overhead rate （预定制造费用分配率） .
The predetermined factory overhead rate is
computed as:

估计的制造费用总额 / 估计的分配基础
 Predetermined Factory Overhead Rate
(slide 2 of 3)
• Assume that Legend Guitars estimates the total
factory overhead cost as $50,000 for the year and
the activity base as 10,000 direct labor hours. The
predetermined factory overhead rate is computed as
follows:
 Predetermined Factory Overhead Rate
(slide 3 of 3)

Many companies are using a method for

accumulating and allocating factory overhead
costs. This method, called activity-based costing
（作业成本法） abc , uses a different overhead rate
for each type of factory overhead activity, such as
inspecting, moving, and machining.
 Work in Process
(slide 1 of 3)
• During the period （生产期间） , Work in Process is
increased (debited) for the following:
• Direct materials cost
• Direct labor cost
• Applied factory overhead cost
 Work in Process
(slide 2 of 3)

During December, Job 71 was completed. Upon

completion, the product costs (direct materials,
direct labor, and factory overhead) are totaled. This
total is divided by the number of units produced to
determine the cost per unit.
Thus, the 20 Jazz Series guitars produced as Job 71
cost $512.50 ($10,250 ÷ 20) per guitar.

After completion, Job 71 is transferred from Work

in Process to Finished Goods.
 Work in Process
(slide 3 of 3)
• Job 72 was started in December but was not
completed by December 31, 2016. Thus, Job 72 is
still part of work in process on December 31, 2016.
– Note that the balance of the job cost sheet for
Job 72 ($21,000) is also the December 31, 2016,
balance of Work in Process.
 Finished Goods

• The finished goods account is a controlling account for

the subsidiary finished goods ledger ( 产成品明细
账 )or stock ledger:
– Each account in the finished goods ledger contains
cost data for the units manufactured, units
sold, and units on hand. 已经生产完没卖出去
Finished Goods Ledger Account
 Sales and Cost of Goods Sold
• 销售收入与销售成本
• During December, Legend Guitars sold 40 Jazz Series
guitars for $850 each, generating total sales of
$34,000 ($850 × 40 guitars). The cost per guitar sold
was $500 or a total cost of $20,000 ($500 × 40). The
entries to record the sale and related cost of goods
sold are as follows:

产成品减少
 Period Costs
(slide 1 of 2)
Period costs （期间费用） emm 销售管理费用 are used
in generating revenue during the current period but are not
involved in the manufacturing process:
Period costs are recorded as expenses of the current
period as either selling or administrative expenses:
Selling expenses are incurred in marketing and
delivering the sold product to customers.
Administrative expenses are incurred in managing the
company, but are not related to the manufacturing or
selling functions.
 Period Costs
(slide 2 of 2)
During December, Legend Guitars recorded the following
selling and administrative expenses:

销售费用 管理费用
 Summary of Cost Flows for Legend Guitars

The previous slide shows the cost flows through the

manufacturing accounts of Legend Guitars for December.
The balances of Materials, Work in Process, and Finished
Goods are supported by their subsidiary ledgers.

形成
inventory
 Job Order Cost Systems for Service
Businesses
(slide 1 of 2)
专业服务企业分批成本的计算法
A job order cost accounting system may be used by a
professional service business:
For example, an advertising agency 广告代理服务 , an
attorney 律师 , and a physician 医师 each provide
services to individual customers, clients 专门客户 , or
patients.
In such cases, the customer, client, or patient can be
viewed as a job 工作量 for which costs are
accumulated.
 Job Order Cost Systems for Service
Businesses
(slide 2 of 2)

The primary product costs for a service business are direct

labor and overhead costs. 服务业不需要原材料
Any materials or supplies are insignificant and are included
as part of overhead costs.
Like a manufacturing business, direct labor and overhead
costs of rendering services to clients are accumulated in a
work in process account.
 Job Order Cost Systems for Service
Businesses
(slide 2 of 2)

When the job is completed and the client billed 客户付账

单 , the costs are transferred to a cost of services account.

Cost of Services is similar to the cost of merchandise sold

account for a merchandising business or the cost of goods
sold account for a manufacturing business.
A finished goods account and related finished goods ledger
are not necessary.
This is because the revenues for the services are recorded
only after the services are provided.
 Job Order Costing for Decision Making

A job order cost accounting system accumulates and

records product costs by jobs. The resulting total and unit
product costs can be compared to similar jobs, compared
over time, or compared to expected costs.
可以在不同时间段内比较，还可与预期成本比较

In this way, a job order cost system can be used by

managers for cost evaluation and control.